Conservative MP Danny Kruger has warned that larger organisations are given an unfair advantage when pitching for government contracts and that “large charities in particular can game the system”.
Kruger, who led a review into civil society in 2020, said the government “often do not buy the best; they buy the service that gives commissioners the least risk”.
In response, NCVO said charities faced “significant problems when engaging with commissioning and procurement” and that contracts had become “less accessible to smaller charities” in recent years.
Kruger was speaking in parliament on Wednesday at a debate on the government’s procurement bill, which he said took “important steps” to improving commissioning processes.
However, NPC said it was “not convinced” the bill would bring about change as a proposed amendment to embed social value in tender processes was rejected by MPs earlier this year.
‘Concentration of big suppliers’
Kruger said there was a “concentration of big suppliers” to the government and said he hoped the bill would open the door to smaller organisations.
“Large charities in particular can game the system, in the way that large companies can, to secure government contracts,” he said.
“The government often do not buy the best; they buy the service that gives commissioners the least risk.
“Those suppliers often run rings around government. In the way services are designed and delivered, we see cost deferrals, with payment pushed back beyond the budget cycle; cost shunting, with different parts of the public sector having to carry the cost for a bad contract; the creaming of the high-value, low-cost clients or services; and the parking of high-cost, low-value services.
“So the providers, whether they are charitable or commercial, game the system. We see that all time, so all this needs improvement and this bill takes important steps towards ensuring that.”
NCVO: Contracts now ‘less accessible to smaller charities’
Sarah Vibert, chief executive of NCVO, said: “Charities are essential to public service delivery, and we know the inherent social value they bring because of their role rooted in communities. But they face significant problems when engaging with commissioning and procurement.
“In recent years, contracts have become larger and more complex, which has made them less accessible to smaller charities. Alongside this, contract values are often not uplifted with inflation, making them insufficient to deliver high quality services that meet community needs.
“This means organisations need to seek additional income to subsidise delivery costs. This deflects risk from the commissioner onto the provider and makes it harder for smaller charities to deliver public services. We want to see widespread changes to commissioning to enable charities of all shapes and sizes to deliver excellent, people focused services for our communities.”
NPC: Not convinced bill will change system
Theo Clay, policy manager at NPC, said: “Commissioners focusing on risk over quality is indeed a pernicious problem, and we definitely need to better recognise the potential of local community services and to measure their value properly.
“We’re not convinced this bill will achieve this though, as it doesn’t require commissioners to evaluate social value, nor does it even define social value – which is a risk in itself. We need the government to count the right things, which is indeed hard to do for the social sector – but it’s not impossible.
“Commissioners could also look at specific aspects of social value such as improved health or education – both of which are key to economic growth and a major strength of charities.
“In the absence of a proper requirement for this in the procurement bill, it falls to local authorities to lead the way.”
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